Show me Numbers

Following my recent podcast for PRWeek  on this years Top 150 (note requires subscription) I promised some detail on my findings. Since then there has been some debate about the worth of the table itself. From my point of view the table has two potential uses. 

1. Ranking who are the largest (by income) PR Agencies in the UK
2. Showing how the PR industry is performing and the strategies that appear to be employed 

Given that a substantial number of the largest entrants do not submit audited numbers (we will call these the Sarbanes agencies) I can understand why some have criticised its validity for the first use. Though I would humbly suggest that it is likely that the majority of the agencies that don’t submit figures would still occupy similar places to those estimated. Just not necessarily in the specific order. 

But I definitely think the table has value for the second use. Allowing for agencies that have not submitted figures, or only have figures for one of the years, there are still 121 agencies in the list for which full figures have been supplied (we will call these the Audited agencies). These agencies account for approximately 60% of the combined income of the Top 150 and around two thirds of the staff. As a sample of the performance of the industry this is still a significant snap shot. 

So I am going to leave the debate around point 1 to others and focus on the areas I discussed on the podcast around point 2. 

What do we find? 

Summary table:

	Income change	Staff change
Top 150 overall	11%	1%
Audited agencies	10%	2%
Sarbanes agencies	12%	0%

Income

Pretty consistent. And don’t think that’s because the Sarbanes estimates are all just the same. In fact the estimates range from a 22% reduction for one agency to a 36% increase for a couple of others.

Staff 

Again fairly consistent and again the estimates for the Sarbanes agencies do vary a lot from a reduction of 29% in one to an increase of 24% in another. 

Different strategies 

But it is when you dig deeper, as I stated in the podcast, that you find the really interesting numbers. 

Here are tables that stratify each of the groups based on their change in staff numbers year on year.
 

Audited agencies
Change in staff	No. of agencies	2008 Income £’m	2007 Income £’m	Change	2008 Staff	2007 Staff	Change	2008 Income / head £’000	2007 Income / head £’000	Change
Significant increase	53	198	167	19%	2,252	1,905	18%	88	88	0%
Little change	17	59	55	7%	639	623	3%	92	88	5%
Reduction	51	234	226	4%	2,435	2,698	-10%	96	84	15%
Total	121	491	448	10%	5,326	5,226	2%	92	86	8%

Sarbanes agencies
Change in staff	No. of agencies	2008 Income £’m	2007 Income £’m	Change	2008 Staff	2007 Staff	Change	2008 Income / head  £’000	2007 Income / head £’000	Change
Significant increase	7	83	68	22%	793	701	13%	105	97	8%
Little change	7	113	99	14%	739	737	0%	153	134	14%
Reduction	9	159	150	6%	1,054	1,155	-9%	151	130	16%
Total	23	355	317	12%	2,586	2,593	0%	137	122	12%

 

A “Significant increase” with regards to staff numbers is defined as 5% or more; “Little change” is defined as 0-4.9%.

What you can see from the tables is that they are consistent in showing the following:

- The Reduction group is the largest by value of income in both cases. By value almost half of agencies reduced headcount in 2008 according to these numbers.  

- The Reduction group increased income per head by the biggest percentage – 15% in the Audited agencies case 16% in the Sarbanes case. 

- The Significant increase group achieved the highest income increase in both cases (19% Audited; 22% Sarbanes) but the smallest increase in income per head – 0% Audited and 8% Sarbanes.  

Analysis 

1. The data consistently tells the same story whether audited or estimated. This is despite the significant variability in those estimates. 

2. The headline numbers hide a wide variation in strategies that agencies have apparently being employing:

- Staffing up for growth
- Maintaining staff levels and apparently looking for margin improvement
- Reducing headcount to enhance profitability significantly 

Implications

The question this poses is which of these groups are best placed for this year?

Have those that have gone for staff growth acquired the cream, and those with the most marketable skills, and so will be best placed to weather the storm? 

Have those that have gone for maintenance taken the right route as their teams and their client relationships may therefore be the most stable? 

Or have those that have gone for an early reduction in headcount made the right call by reducing their cost bases before the recession bit the hardest?

I would be very interested to know the thoughts of those of you who have first hand experience of this discussion.